Surplus is going, going, gone

THE difference between this year and last year is 100 percent. That is the difference in the state's rate of growth.

Last year, the state's bean counters, legislators and Gov. Linda Lingle had an official prediction that the state would take in 8 percent more money in taxes. The actual number turned out to be 16 percent, and suddenly we were all thumbing through a wad of cash figuring out what to buy.

The state budget surplus is calculated today at $630 million, with further revisions expected when the Council on Revenues meets next week.

As long as the economy keeps bubbling along, the state gets 4 percent of almost all the action. On Friday, Lingle predicted that the economy will be even better than the earlier projections.

The question for today is not so much what will Lingle and the Legislature spend the money on, but how many times has the $600 million surplus already been spent?

The simplest plan comes from the Department of Education, which points to its unair-conditioned, unpainted and unimproved schools as proof that the surplus should go toward rebuilding the schools.

Surveys show improvements to public education a top concern among voters, so it is easy for lawmakers to slip more money to the DOE. Sen. Brian Taniguchi, the veteran Ways and Means chairman, says he likes that idea.The horror stories of under-equipped schools and unprepared teachers in overcrowded classes has not stopped, despite the Legislature's assurances that help is on the way.

Lingle, however, wants education dollars to go directly into classroom and isn't likely to enlist in a Democratic-designed war on school poverty.

What Lingle does like is a tax cut, or several tax cuts and a tax rebate.

But Taniguchi is wary of both tax cuts and rebates. He recalls how former Gov. John Waihee used a portion of his $500 million surplus 15 years ago to give everyone a $100 rebate.

"We have a million people and you give everyone $100 and you have just spent $100 million, and I'm not sure that is what the people want," he said.

Indeed, Lingle first floated the rebate idea during the summer and so far it has not caught any lift.

Raises, not rebates, are what concern legislators today. Democrats point to the final years in the labor contract with University of Hawaii professors with its raises of 9 and 11 percent and fear that an arbitrator would award the 40,000-member Hawaii Government Employees Association similar raises, if the money is available.

The decision, according to several legislators, will be how to spend the money before it all winds up as a pay raise for HGEA. Watch for the unions to be some of the biggest "fiscal conservatives" when it comes to spending the state surplus.

So when voters ask what happened to the surplus, folks at the Capitol are likely to say, "What surplus, we spent it already."